Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Sep/Dec 2017 Sample Questions.
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- October 29, 2018 at 5:06 pm #480153
i did not get the calculation for the net asset figures i do not know why they use both opening and closing figures and to calculate what should be the average net Assets…. though it looks simple, but i do not why using it.
if an opening figure(b/f) is 13000 and closing figure c/f) result to 9000
the 4000 differences is called what sir? Is it a reduction or addition bcos from the T account
addition, purchases, revaluation are on the debit side while acc depr , disposal are on the credit side along with the c/f figure.
Also, the head offices charges and the 30% as part of the depr costs are said to be controllable profits , i was thinking the uncontrollable figure are the ones to add back since the manager can not control such costs.
please, assist on detail clarifications… adjusting figs are primarily my troubles in calculations.
Just FM Paper , where ARR and PP figures needing adjustments in the profits figures are a bit confusing where operating profits and cash based measured are used.
October 30, 2018 at 8:05 am #480199T-accounts are not relevant for Paper PM.
The average net assets are calculated as we normally calculate an average i.e. by adding the opening and closing net assets together and dividing the total by 2.
The net assets will change over the year because of buying assets, selling assets, and depreciating, but exactly why they change is not relevant for calculating what the average is.
The head office costs and the part depreciation are the uncontrollable ones, and they have therefore been added back to the profit in the examiners answer – the profit controllable by the manage is higher when these costs are excluded.
October 31, 2018 at 9:57 am #480328Thank you for your responses. However, it was said that 30% of the depreciation costs were the one controllable but not owned by the Head office . I think what that means 70% will be the uncontrollable costs and that should be added back to the profit ? If 30% is not owned by head office and its not controlled by the head office as well. Or i am not getting the information clearly?
This is where my confusion really is.
Thank you for more cleared response in anticipation.
November 1, 2018 at 7:16 am #483193The question says that 30% of the depreciation related to assets controlled by head office. The 30% is therefore uncontrollable by the division and should be added back.
Obviously the assets are not owned by head office – they are owned by the division otherwise the division would not not have depreciation in their accounts.
November 1, 2018 at 12:29 pm #483500Very much appreciated your responses. Your simply the best … i hope others could response swiftly as you do here.
Well i see why i obviously could not make this paper… firstly, the net asset i assumed that any c/f value was the balancing figure that i need to work on to get the average . Secondly, i never taught of adding back these costs to the profits since those charges where made by the head office and i misinterpreted the 30% depr costs.
I assumed those costs were not controllable by the divisional managers of C & E. I did passed paper F2 & F3 through your lectures but i do not know why i am still struggling to pass F5 and F7… they look so simple but i just cant get while i do not pass them. I hope to make it this time around.
In summary, any costs charged outside the division must be added back to get the controllable profits … that is profits controllable by divisional managers.
I do struggle with adding back items to profits. If i do not add those figure does that mean i will not get the full marks even when i follow the right steps?
November 1, 2018 at 3:29 pm #483520Thank you for your comments 🙂
If you do not add back the relevant figures to the profit then you will not get full marks. However, provided you are showing your workings then you do not lose all the marks – you still get the marks for whatever you do correctly.
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